How do we begin to revive the border region economy?

On 8 March the NI Deputy First Minister Martin McGuinness will launch the sixth edition of the Centre’s annual research publication, The Journal of Cross Border Studies in Ireland. One of the most interesting articles featured in it is by two eminent economists, Dr John Bradley and Professor Michael Best, on the difficulties and opportunities facing those with the onerous task of promoting the revival of the border region economy: that is the economies of the six Southern counties (including Sligo) and the seven Northern local council districts which adjoin the border.

The authors bring to Irish border research a wealth of international experience: John Bradley for his work on the operation of the Structural Funds and the barriers facing the post-Communist economies of Central and Eastern Europe, and Michael Best on regional business strategies around the world. He is also the author of two seminal books on how businesses and production processes have evolved over the past century.

The article gives a foretaste of a research project commissioned by the Centre and funded by the Special EU Programmes Body under the INTERREG IVA programme, which will be completed at the end of this year. Central elements of this research involve a regional manufacturing overview, a study of apparent ‘clusters’ of firms involved in related activities, and an in-depth study of specific small towns in the region. The clusters are of technology-based firms in the more advanced eastern border region; clothing and seafood processing in the north-west; and furniture and food processing in the mid-border region.

The authors begin by sketching the wider political and economic background to the Irish border region and its economy: the excessive optimism of the immediate post-Belfast Agreement period, with largely disappointed hopes that foreign investment would flow back into Northern  Ireland and the Southern border region after 30 years of conflict; the enduring and even increasing polarisation of communities in the North; and then the spectacular financial and economic crash of the post-2007 period, with GDP  and investment in 2009 falling by 7.5% and 31% respectively in the Republic of Ireland, and by 5% and 15% in the UK.

In undertaking this research, Bradley and Best took the unusual step – for economists, who tend to be obsessed by numbers – of actually exploring the border region themselves and interviewing regional industrial promotion officials, local chambers of commerce and individual factory owners and managers. They found that the border featured far less as a problem to firms located in the region than they had anticipated. ‘Once a firm had identified the island as its target market, and made determined and sustained efforts to build that market, then the benefits of serving a  potential of six million consumers became available.’ They give the example of Crossgar Food Services, whose vans are able to leave their plant just north of Downpatrick late at night and make deliveries as far south as Cork by 5 am the next morning.

They found that successful internationally trading firms were to be found in deeply rural border areas. They cite the example of Walter Watson near Castlewellan in County Down, a family firm which has grown from a blacksmith’s shop 50 years ago to a dynamic company employing 180 people making agricultural machinery, overhead cranes and structural and reinforcing steel. In a company like this, the leadership is by independently-inclined individuals who do not use debt finance, but grow their firms ‘organically’ via reinvested  profits, and whose emphasis is on fostering and sustaining their mainly local labour force. If such old fashioned qualities had been more widespread in recent years, perhaps Ireland would now be facing into a brighter future!

These border-based entrepreneurs have a long time horizon: they have lived through the hard times of the Northern Ireland ‘troubles’ and the current recession (which they rarely if ever mention), and they are firmly focused on building their companies’ resilience for the future. As Bradley and Best observe: ‘When run by exceptional people, firms in the border region can excel. But there are too few of them. How can their numbers be increased?’

The authors then comment on the surprising brevity with which county development plans in the Southern border region treat the local manufacturing base, and their tendency ‘to take for granted the role played by individual business enterprises or geographical clusters of similar enterprises.’ They suggest a radical rethink of cross-border institutions in the business support and development area so that the ‘island market place’ focus of InterTradeIreland is complemented by initiatives which concentrate on the specific needs of the peripheral and divided border region. ‘Until we bring ourselves to address this historical legacy of distortion and disadvantage openly, honestly and effectively, the border economy will continue to be isolated from mainstream island life and its development potential will remain unrealised’, they conclude.

Andy Pollak

P.S. A number of readers of last month’s ‘Note’ comparing the Northern and Southern health systems have pointed to my lack of mention of comparative health outcomes in the two jurisdictions. They point to the dramatic decline in death rates for people over 65 in the Republic of Ireland in the first five years of the century (over 26% from all causes), with even more striking decreases in the incidence of heart disease and strokes. Infant mortality is another area where the Republic has improved at a greater rate than the rest of the EU, including the UK. The difficulty is that international statistics do not record separate figures for Northern Ireland, and there is a surprising lack of any research comparing health outcome data in the two Irish jurisdictions. I will try to research this topic a little more and return to it in a future column. In the meantime, if any reader can point me towards any reliable and accessible North-South data in this complex area, I would be grateful.

  • Coll Ciotach

    You can never achieve the revival of the border economy, at least not to its fullest potential, until you get rid of the adversarial approach of our politicians. Take the corpo tax issue. This is seen as an unfair advantage by some, but no mention of the lower wages and other advantages that the north may have.

    To get the whole island working we need a more mature approach. We need to see how to get both economies closer taking the best of both. (And I know that is not an overnight transformation). The adversarial approach just results in beggar my neighbour economics. Instead try to compliment each other and raise both sides.

    Look at the issue of the petrol station. I can remember people buying only in the north as fuel was cheaper. All petrol stations closed south of the border. Recent years has seen a reverse of that. So we have an economic death zone along both sides of the border. One year business booms in Newry – next year it is Dundalk.

    Get the economies closer and get the border areas working

  • between the bridges

    a) tax smuggling
    b) bring back the punt and tie it to sterling
    c)extend the nice roads northward
    d)zero vat for imports (both ways)
    e) get ifi ntereg etc funds where there needed rather than in ‘admin’
    f)make a grab for the Chinese bus tour route
    g)burn tesco adsa dunne’s etc bring back high streets

  • Secret Squirrel

    Whilst extending the ‘nice roads northward’ may have its merits for counties like Louth, Monaghan and Cavan, doing something similar from Leitrim and Donegal would no doubt involve costly tunneling projects under the Atlantic Ocean.

  • The Raven

    “e) get ifi ntereg etc funds where there needed rather than in ‘admin’”

    Interested to hear your take on this…

  • Cynic2

    Why the border area instead of, for example, the Glens Of Antrim or the basketcase that is Limerick?

  • Rapunsell

    Is is right to assume that places in counties abutting the border are in the border region? Castlewellan by my reckoning — well Walter Watsons business anyway is at least 30 miles from the border. You’d get from Belfast quicker to border than there.

    “mainly local labour force” don’t think that’s right either ( although nothing wrong with that) significant eastern european workforce in Castleweellan area many working in Watsons.

  • aquifer

    The two currency zones and administrations will tend to prevent the border economy reaching critical mass and beginning to grow itself. And it is not absolute critical mass that determines where growth happens, but relative, and the cities of the Eastern seaboard seem to be where it is at.

    I recently saw an interesting article suggesting that it takes a certain ratio of economic ‘activists’ ‘innovators’ or entrepreneurs to create the jobs for the rest of us. This was in a discussion about why using economic deflation to lower debt could be a bad idea, as the entrepreneurs will tend to expire business-wise in this scenario.

    Smart immigrants tend to be, or can become, economic activists.

    First off most of them do not perceive incomes in those areas to be low, as most come from poorer areas of the world, so are willing to see themselves as empowered.

    Secondly, it is possible to screen immigrants for smartness by insisting on qualifications or maybe even just having a lump of money -they had gathered it once, why not again?

    Thirdly, there should always be a clincher. Put in broadband and they will not notice they are living in a spare NAMA Semi-D in a hedgerow, but will still be producing high value intellectual property and services. Easyjet is always just a drive away if they need an urban recharge from time to time. An Post works everywhere, use it.

    Fourthly, or firstly, what we need is to allow lots of smart immigrants to come here, but only if they live in the border area. It is easier for enginerring Phds from the former eastern bloc to go to the US than to stay in Belfast, and many capable couples have visa problems.

    Draw a big bent sausage between Strabane and Armagh.

    And start stamping those visas ‘permission to stay for five years, and longer if you make a million’

  • Zig70

    I don’t get furniture. Reminds me of a quip a visiting Canadian made at a crowded table, “Paddy, are you still at the carpentry” to the rest of the table, ” Paddy made me a fantastic harp” Paddy said nothing and looked a bit pained. It was a nice harp, had ‘Portlaoise’ up the side of it. What about Tourism? I spent many a happy summer in Mullaghbawn and the Ring of Gullian is a gorgeous place to be. My kids don’t like walking and exploring up hills, I’m hoping the time will come when they see the light. I love the silence in the evening, lack of street lighting, fantastic pubs. Lots of people from the border areas commute, even across the water so roads are a big issue, but often they take the money out with them. Food processing is such an economists line, Value added blah blah. Is that food processing local produce or imported food? I’d like to see the take on the current farming, reliance on subsides and the overall competitiveness of the current farming stables. The land isn’t the best in a lot of border areas. Is there a link to a report? The world’s growing fast and needs food, must be something you grow in rocky ground. Also surprised bioenergy didn’t come into it, esp given the oil prices.

  • wee buns

    ‘The difficulty is that international statistics do not record separate figures for Northern Ireland, and there is a surprising lack of any research comparing health outcome data in the two Irish jurisdictions.’

    Interesting omission and certainly very strange given the amount of ‘peace’ money that’s been kicking about for the past 15yrs?

  • Jo

    An ostentatious smoking a joint appears to be why we should take yr views seriously, Mark. Have you tried ATW, to get attention? You’ll get it there,

  • Jo

    FG 70 Plus. Lab 32. FF 22. SF 18. Gns (I hope, nothing, they might get 2)Other:. I donot care

  • between the bridges

    raven..aplologiese for post awhile under te influ assuming that maybe you work for said agenyis..where te dosh go? ophs sori nokia speech! slap own wrist time!

  • George

    “the basketcase that is Limerick”

    Ever been to Limerick? If you have I bet it wasn’t to the part that people familiar with that part of the world know to be the basketcase section. Yet the usual stereotypes are still repeated.

  • The Raven

    No, I don’t work for them at all. But I have many colleagues who have applied and been unsuccessful. Spend in these programmes always has admin attached to it because of the amount of paper the EU generates. That’s me being smart, but they do always have an admin budget. Technical assistance I think they call it in officialese. Of course at the end of the programme, this is usually dwarfed by the amount spent of projects. Admin is IIRC never more than 15% of total budget. That figure is set by the EU.

    Problem is that INTERREG is one of the few funds that you can get 100% funding from. 75% is EU. 25% is British/Irish Government money. Allegedly because money is tight, the civil servants are binning all the projects because they don’t want to put in their 25%. It’s easier to blame the applicants than cough up.

    Just wondered what your experience was.

  • between the bridges

    goruouse george……only time that i have had the pleasure was as part of a non fact finding male bonding someones getting married tour… so its a bit blurry…lots and lots of pubs but not much culture for the post modnerist.

  • between the bridges

    raven. sorry apart from being stupid enough to post whilel shrunk,( your enquiry deserves better) my humble expierence of dealing with grants ( dating back to the millieum bug grant) is that for every pound/punt/euro that goes to a good/half deserving cause at the very very least an equal or more likely more than equal amonut goes on admin to get it there ie jobs for the old boys and girls who shuffle paper.

  • Cynic2

    “Ever been to Limerick?”

    Yes.

    Nice ring road. I thought the city itself was a dismal hole. Mind you it was raining

  • Monaghan and Cavan have a massive supply of over housing. How complciit were the local councillors, those in new Brush Sinn Fein, in particuar, in granting planning applications for these silly schemes?

  • Secret Squirrel

    Rapunsell says:
    Is is right to assume that places in counties abutting the border are in the border region?

    I’d imagine so Rapunsell.

    Castlewellan by my reckoning — well Walter Watsons business anyway is at least 30 miles from the border.You’d get from Belfast quicker to border than there.

    I don’t know those roads too well myself but perhaps somebody else here might.
    Relax there, let your hair down, and we’ll see what transpires.
    Welcome to the machine and all that.